More signs pointing higher in Crude Oil

• Posted by Greg Harmon
• on April 7th, 2016

Crude Oil was a one way trade for 18 months. Down, down, down. From mid 2014 until the end of 2015 the price of a barrel of West Texas Intermediate Crude Oil fell from a high over $100/barrel to under $40/barrel. And then 2016 started and it looked like the carnage would continue. In less than 3 weeks it had fallen another $13 or 30% to $27.50. Jokes were being made about the barrel storing the Crude being worth more than the Oil itself.

All along the way analysts had wild predictions about where the price would head next. And they still do. Its going back down to $15 or it is due to rise to $60. Odd how a commodity that is so widely traded and researched can have such wide perspectives. That is what markets were designed for. To wade through the noise and see what things are really worth.

And that price action has shown some real strength since mid February. At the end of March I noted that there are now long term price patterns that suggest a bottom has been found here. But long term charts can have a lot of fluctuation within the shorter time frames. This week is seeing a shorter term picture that is also looking healthy and to the upside.

The chart above shows the price of Crude over the last 9 months. The stair step down that was broken when a double bottom formed and then a push through trend resistance in late February. The long trend higher from the February 11 low to the march 18 high resulted in a $16/barrel increase. Since then the pullback, in a bullish flag, retraced over 40% of that move. But the price turned back higher Tuesday and followed up with more upside Wednesday, breaking the flag. This gives a technical target of about $52/barrel. That would be about at the rising 17 year trend line that broke in mid 2015.

What makes it interesting is that this second perspective of the price action pointing higher adds strength to the bullish case. It is not important today if it goes to $52 or $62 or $100. What is important is that many perspectives are aligning that all point higher.

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